Wages rise in S'pore, but productivity lags
THE report card for Singapore's employment landscape is out: The country has earned top marks for moving employees' wages up, but less so for overall productivity, which remained in the red.
Amid a tight labour market and economic growth, salaries rose by 5.3 per cent last year, revealed the Ministry of Manpower (MOM) in a report on wage practices yesterday. This was up from the 4.2 per cent in 2012.
Rank-and-file employees saw the biggest change in their basic wages, rising from 4.3 per cent in 2012 to 5.4 per cent last year - the highest in 16 years.
Human resource experts told My Paper that the upward movement of wages across the board was due to the demand for talent.
"Companies now know that if they want to hire the best people in the market, they've got to pay for it," said Toby Fowlston, managing director of Robert Walters Singapore.
Said Mark Hall, vice-president and country general manager of Kelly Services: "The tightening of foreign employment quotas means that companies are now less reliant on foreign workers, which is likely to have helped raise the salaries of rank-and-file employees."
At the same time, while labour productivity growth was an improvement over the minus 1.4 per cent in 2012, it still registered in the negative region at minus 0.2 per cent.
Industry experts told My Paper that as employees' wages here grow inevitably, businesses could take a beating if other concerns - such as those relating to rising business costs and the manpower crunch - are not addressed properly.
"No employers would reject the idea of motivating their employees with higher pay," said Victor Tay, chief operating officer of the Singapore Business Federation (SBF).
"But what seems to be happening now is that wage increment is leading productivity gains.
"Companies are made to put the cart before the horse, when already, we are struggling with the rudimentary elements of running a business, be it fighting against a lack of manpower or high rentals."
As a result, businesses face eroding margins as they give in to the pressure of paying employees more in order to retain the manpower they need, he said.
Koh Juan Kiat, executive director of the Singapore National Employers Federation, pointed out that "productivity efforts take time to yield results while wage adjustments can be made quickly".
But he expressed optimism over the improvement in productivity, which continued to grow by 0.9 per cent in the first quarter of this year.
"This momentum must be sustained," he said. "Employers must continue to put in efforts to raise productivity so as to sustain their competitiveness and support wage increases."
CIMB regional economist Song Seng Wun pointed out that for many companies here, fortunately, "the complaint is not that there is no business".
"Pushing for productivity is still a work in progress, and it takes time," he said.
"There is no U-turn for foreign worker policies or rising business costs, so adapting work processes is the only way to go."